Dubai New Onshore Access Framework for Free Zone Companies

Dubai new Decision No. 11 of 2025 enables free zone companies to legally operate in mainland Dubai through new licensing pathways, reducing structural inefficiencies and enhancing market access. The reform supports phased implementation, with key milestones ahead, and strengthens Dubai’s position as a regional business hub.

By Giulia Interesse 

In a landmark step toward regulatory modernization and business liberalization, Dubai has issued Executive Council Decision No. 11 of 2025 (hereinafter referred to as the “Decision”), creating a unified framework that enables companies licensed in the Emirate’s numerous free zones to legally conduct business in mainland Dubai.

Effective from March 3, 2025, the Decision represents a major evolution in Dubai’s economic governance, aligning with the goals of the Dubai Economic Agenda (D33) and the Emirate’s long-standing ambition to position itself among the world’s top three global economic hubs by 2033.

Regulatory shift with the Decision

Historically, free zone entities in Dubai faced strict legal boundaries that confined their operations within the geographic and regulatory limits of the zones in which they were incorporated. With limited exceptions—typically governed by ad hoc memorandums of understanding—these companies were barred from conducting business in mainland Dubai, creating fragmented corporate structures and operational inefficiencies. This framework forced many foreign investors to establish multiple entities across different jurisdictions to legally access both free zone and onshore markets, resulting in increased costs and administrative burdens.

The three pathways to onshore activity

The new Decision fundamentally alters this landscape by formally enabling free zone businesses to conduct commercial activities onshore through three distinct mechanisms:

• Licensing a branch with physical presence in mainland Dubai;
• Licensing a branch operating onshore from an existing free zone location (without physical relocation); and
• Obtaining a temporary permit for specific, time-bound onshore activities (up to six months).

These options offer unprecedented flexibility for businesses seeking to access Dubai’s wider market without necessarily altering their physical or employment footprint. Importantly, entities can now leverage their free zone workforce for onshore operations, preserving favorable employment terms while expanding commercial reach. The move also allows businesses to rationalize operations and reduce reliance on redundant structures.

Notably, the Decision excludes financial institutions licensed in the Dubai International Financial Centre (DIFC) from its scope. This carve-out reflects the DIFC’s distinct legal framework and its regulatory independence in financial services, which continues to be governed under separate rules aligned with international financial standards.

Compliance and operational requirements

While the Decision opens new doors for free zone companies, the ability to legally operate onshore is conditioned on meeting a range of regulatory and procedural obligations. These are designed to ensure both transparency and alignment with Dubai’s broader economic governance framework.

Licensing and approvals

To engage in onshore activity, free zone companies must obtain the appropriate licenses or permits from the Dubai Department of Economy and Tourism (DET).

The licensing process may also involve approvals from sector-specific regulators and other relevant government bodies, particularly in industries subject to special oversight (e.g., healthcare, financial services, or education).

Each of the three permitted pathways—physical branch, free zone-based onshore branch, and temporary permit—has its own set of procedural requirements and compliance criteria.

Accounting and financial reporting

Companies must maintain separate accounting records for their onshore operations. This requirement serves both to ensure financial transparency and to facilitate compliance with the UAE’s federal corporate tax regime, which came into effect in 2023. By segregating financial reporting, businesses can more accurately determine tax liabilities associated with onshore income, thereby reducing risk and improving audit readiness.

Labor and emiratisation considerations

The Decision offers operational flexibility by allowing companies to deploy free zone–based employees for onshore activities without the need to alter employment contracts or re-register staff. However, businesses must still adhere to federal and local labor laws, including the UAE’s Emiratisation mandates, which require certain categories of firms to employ a minimum percentage of Emirati nationals. This could create a need for proactive workforce planning as companies navigate dual compliance with both free zone and mainland obligations. 

Strategic advantages for businesses

The new framework delivers a suite of strategic advantages that go beyond regulatory flexibility, offering companies the tools to streamline operations, reduce costs, and optimize their market engagement strategy.

Cost efficiency and operational streamlining

By enabling free zone companies to operate onshore without opening new physical offices or hiring dedicated mainland staff, the Decision significantly lowers the cost of market entry. The temporary permit option is especially attractive for businesses pursuing short-term projects, seasonal campaigns, or pilot ventures, offering access to new customer bases without long-term commitments.

Organizational restructuring and simplification

Companies now have the opportunity to restructure their corporate presence in the UAE. Instead of maintaining multiple legal entities to comply with jurisdictional requirements, businesses can centralize operations under a free zone umbrella while still engaging with the mainland market. This can result in the de-registration of redundant entities, reduction in lease costs, and simplification of group governance structures.

Increased market reach and revenue potential

The ability to legally expand into mainland Dubai—one of the region’s most dynamic commercial hubs—represents a transformative market opportunity. Free zone entities can now directly engage with a broader client base, pursue government contracts, and forge new commercial partnerships that were previously inaccessible under legacy restrictions. 

Positioning for long-term growth

Ultimately, the Decision positions Dubai as a jurisdiction where regulatory pragmatism meets economic ambition. It aligns the Emirate more closely with global business norms, making it an even more compelling choice for international investors looking for regulatory certainty, competitive costs, and access to regional markets from a single operational base.

Implications for foreign investors and multinational corporations

The Decision carries substantial implications for foreign investors and multinational corporations (MNCs), positioning the Emirate as an even more attractive entry point into the Middle East and North Africa (MENA) region. These include:

• Lower barriers to market entry: For global firms previously deterred by the need to establish separate mainland entities to reach customers beyond free zones, the new licensing pathways offer a viable and legal route to full UAE market participation. By enabling onshore operations under an existing free zone structure, Dubai reduces both regulatory friction and the financial burdens traditionally associated with jurisdictional compliance.
• Flexible and phased expansion: The introduction of the temporary permit regime is especially noteworthy. It allows foreign companies to test the market, conduct short-term projects, and build client relationships without the need for immediate, large-scale commitments. This model suits businesses looking to evaluate commercial viability before establishing a permanent presence, offering strategic optionality that was previously unavailable.
• Enhanced case for regional headquarters: The reform further strengthens Dubai’s value proposition as a regional headquarters location. With its world-class infrastructure, global connectivity, and now, a more integrated legal framework for cross-jurisdiction operations, the Emirate offers a compelling base for managing regional activities under a unified, streamlined corporate structure. MNCs can optimize tax positioning, workforce allocation, and resource deployment without the need to navigate dual licensing regimes.

Implementation timeline and expected developments

While the regulatory shift is already in force, full implementation is expected to unfold in phases, with several key milestones on the horizon.

Activity list and regulatory clarity

A critical step in operationalizing the Decision is the issuance of the official list of permitted onshore activities by the DET, in coordination with relevant regulatory authorities. This list—expected within six months of the Decision’s enactment—will clarify the scope of permissible commercial engagement and set boundaries for sector-specific compliance.

Grace period for adjustment

Recognizing the practical challenges of immediate compliance, the authorities have provided a grace period for existing operations to align with the new framework.

Free zone companies currently conducting business onshore without proper licensing will have until March 2026 to regularize their status. This transitional window offers businesses time to conduct internal audits, seek legal advice, and adopt new structures without incurring penalties. 

Anticipated implementation challenges

Despite its promise, the Decision’s implementation is not without uncertainty. As of now, many free zone authorities and the DET itself are awaiting formal operational guidance.

Moreover, inter-agency coordination and sector-specific interpretations (particularly for regulated industries) may introduce friction in the short term. Businesses should therefore anticipate a phased and potentially uneven rollout, with early adopters advised to maintain close communication with relevant authorities.

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